News Ticker

LMS Talks Sports Facility Market Trends

From left to right: Chris Nations, President of Nations Group; Krista Shepherd, Principal at Gould Evans; Nick Dodd, Managing Director at Piper Jaffray; Chase Farnsworth, Senior Project Manager at Mortenson

By Tasha Anderson for Arizona Builder’s Exchange

It’s October, which means football season is in full swing, hockey has just begun, and basketball is right around the corner, making Sports Facilities the perfect AZBEX Leading Market Series topic for the month.

Attendees gathered at the DoubleTree by Hilton Tempe on Thursday, October 4th, to gain insight into the Sports Facilities market and what trends might be coming in the next five to ten years.

AZBEX President, Rebekah Morris began the presentation by once again giving attendees a brief overview of the market with analytics taken from the AZBEX Database. “When I look at this, it’s actually a little difficult,” she said. “So, sports facilities in general, there are not a lot of them. We have about thirty-eight individual projects in our database that are very specific athletic facilities/sports facilities.”

She went on to note the top owners in the Sports Facilities market, with Arizona State University at 20 percent, Arizona Coyotes at 17 percent, and City of Phoenix and Phoenix Rising FC each at 11 percent. She also noted 31 percent of projects have not yet selected a design firm and 50 percent have not yet selected a general contractor.

Private Investment, Multi-Use and Collaboration

After the quick rundown of the market, Morris invited panelists Nick Dodd, managing director for Piper Jaffray; Chris Nations, president of Nations Group; Krista Shepherd, principal of Gould Evans, and moderator Chase Farnsworth, senior project development manager for Mortenson, to give their perceptions of the market and what trends they see coming down the pike in the next five to ten years.

While most of the sports facilities today are heavily financed by public agencies, the panelists seemed to be in agreement that there is going to be more private investment in these public sector projects.

“The most recent Spring Training facility is in Maryvale for the Brewers, and if you look at the breakdown of that, it’s about $70M; $55M-$60M of it is coming from the Brewers, and so that’s the first time we’ve seen a significant investment from the team or the private sector and a less significant investment from the public sector,” explained Dodd. “I think it just demonstrates that there’s a bit of a trend or a shift away from some of the public funding and private sector’s having to bring some of the money to the table in these types of facilities.”

Dodd also touched on private delivery methods on what are meant to be public projects. “Is there an issue when governments build things versus the private sector? How do I finance something that has a public element, but the public wants to have it be more private?”

Nations elaborated on Dodd’s questions. “What does that mean? It means opportunities for you all to participate more in a private sector delivery of a public project,” he said, addressing attendees in the room. “We can use taxable debt, like public finance and allow it to still be delivered privately. A lot of that is related to speed and money… we can increase savings on both sides of that.”

Another trend discussed was the rise of multi-use facilities, such as the current Wells Fargo Arena Renovation and New Multi-Purpose Hockey Arena project. The project will renovate the existing Wells Fargo Arena for men and women’s basketball and volleyball and include a new multi-purpose arena for Sun Devil Ice Hockey and more. Owners are looking for new facilities that can be used for more than just one sport this way it can be used all year round.

“I think the days of single-use facilities are, you know, we’re going to see less of that and more of these dual-use facilities,” said Dodd.

From the design side, Shepherd discussed the future of collaboration on sports facility projects. “I also think more collaboration is imminent and… I think there’s more important opportunity for everyone in the room to partner up on these projects because they’re too massive, they’re too complex for only one entity to kind of manage.”

Industry Challenges

One of the questions asked during the presentation was about the challenges that industry might face in the future, and one of the biggest challenges the panelists perceived was, again, finance.

Nations discussed the problem with the lack of political backing to get projects off the ground because individual tax payers don’t feel they see their investment coming back to them.

“Reality says, these things do pay themselves back and the work that goes into proving that out through economic impact,” Nations said. “The problem is no one can put economic impact in their wallet.”

Another issue Shepherd pointed out was the fact that everyone wants the “shiny new thing.” To build new and abandon the old instead of renovating existing facilities.

“My hope is that the trend is there’s more renovations instead of abandoning those buildings and creating new facilities,” she explained. “We have to let go of the shiny new thing and rely more on renovations.”

Dodd elaborated to say that due to the increase in cost to build new facilities, renovations just make more sense.

What Can We Do?

Toward the end of the presentation, Farnsworth asked the panelists what the attendees could do to help make a difference and provide solutions to the challenges. Each panelist gave their own insights and perspectives to help attendees prepare if they want to break into the sports facilities market.

“Get to the clients… do your business development. That’s important because this business is still a relationship business and they want to work with people they can trust,” said Nations.

“In a lot of cases, as we’ve seen, there’s a public element to it, so if you’re not used to working with public agencies, you should think about what that means. It’s a totally different world,” said Dodd.

Shepherd added to Dodd’s point by giving an example from ASU and how anyone bidding on an ASU job has to be prepared for what the university wants. “ASU’s a very sophisticated buyer… and they have no tolerance to go in and discuss the terms of their contract.”

The next Leading Market Series on November 1st will discuss Senior and Assisted Living Facilities. To check out dates and topics or to register for the next event, visit: http://lms.azbex.com/

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